October 04, 2013

Managing Partners Wary of Shutdown, Debt Ceiling

A
short-term government shutdown isn’t likely to cut into law firm profitability,
several Washington managing partners said in interviews about the ongoing
impasse on Capitol Hill.

"I'm
not worried about profitability or the health of the firm," said Paul
Kiernan, executive partner for Holland & Knight's 135-lawyer office in Washington.
"I think it's really a question of what will happen to the economy. If
this continues to drag on then we will look at all those things. Right now
we're not looking at any adjustments or focus on our numbers for the rest of
the year."

While
the shutdown has not yet hurt the firm, Kiernan said, it could prove harmful to
businesses and clients. "For most of our clients, it has been a real
concern,” he said. “With virtually every client, they are taking a second look
at business decisions." For Holland & Knight's lobbying clients, that
means missed meetings and cancelled appointments on Capitol Hill, he said.

Andrew
Tulumello, co-partner-in-charge of Gibson, Dunn & Crutcher's Washington
office, said he expects the government shutdown will have little impact on the
firm's business. He noted that the harm on the judiciary—which has one more
week of reserve funds available—could cause some slowdown in the courts.

"We've
had a few reports, for example, about some courts potentially needing to
prioritize the criminal dockets over the civil dockets," Tulumello said in
an email to Legal Times. "These have been preliminary reports and
unless we have a prolonged shutdown, we expect things to continue on the track
that we are on."

McKenna,
Long & Aldridge’s Washington office managing partner, Joanne Zimolzak, said
the main focus during the shutdown has been trying to help clients navigate
through the thicket of agency closures. Lawyers at the firm, she said, are busy advising
regulatory clients—including in the environmental and food and drug arenas—on
issues now in limbo from the shutdown.

“We
are working with clients to address immediate concerns and as this evolves
there may be changing strategies,” Zimolzak said. “This is something we are
continuing to watch.” She said clients are wondering “what recourse do they
have for different scenarios.”

Joseph
Fanone, managing partner of Ballard Spahr's Washington office, said he was less
concerned about a government shutdown than with the other major financial issue
pending in Congress: raising the debt ceiling. The federal government would
lose its ability to borrow if Congress does not increase the country’s $16.7
trillion debt ceiling over the next several weeks.

"You
already saw some reaction in the stock market," Fanone said. "It will
affect not only the U.S. economy but also the global market."

Jonathan
Aronie, co-managing partner of Sheppard, Mullin, Richter & Hampton's
Washington office, provided shutdown tips to clients in the government
contracts practice. The advice included keeping up with deadlines, documenting
expenses and creating an alternative work plan for employees.

"With any luck, the government will right its ship and these
contingency navigation plans will become unnecessary quickly," Aronie
wrote. "Then we can all sit back with a good drink and relax while
listening to our elected representatives blame one another for this total
abdication of leadership."